OKLAHOMA CITY (KFOR) – An Oklahoma state agency says it is canceling a multi-million dollar contract with a local restaurant following “suspected fraudulent activity.”

Earlier this month, a report by the Legislative Office of Fiscal Transparency was raising eyebrows about a four-month investigation into significant expenditure growth by the Oklahoma Tourism and Recreation Department.

The report focused on lawmaker concerns regarding a contract with Swadley’s Bar-B-Q restaurants.

Officials say the Oklahoma Tourism and Recreation Department has paid $13 million to Swadley’s Bar-B-Q restaurants to renovate and run the Foggy Bottom Kitchens in certain Oklahoma state parks.

Those payments include $2.1 million to cover operating losses in 2021. The current contract requires the state to pay up to $1.2 million for annual operating losses.

Swadley's Bar B Q sign
Swadley’s Bar-B-Q. KFOR file photo.

After the cost of the contract was brought to light, several lawmakers and state officials have expressed concerns.

Recently, Oklahoma County District Attorney David Prater has called for an investigation by the state auditor.

In a letter from Prater to State Auditor Cindy Byrd, obtained by KFOR, the DA said, “The alleged conduct has resulted in at least $4,500,000. in excessive payments to Swadley’s by the State of Oklahoma. I have concluded that a criminal investigation should be conducted.”

On Monday, the Oklahoma Tourism and Recreation Department announced that it was canceling the lease concession agreement with Swadley’s Foggy Bottom Kitchen.

According to the statement, the department said it was canceling the contract due to “suspected fraudulent activity and questionable business practices.”

The department said it started an internal investigation in the fall of 2021 after “reports of financial irregularities were brought to our attention.”

Officials say financial payments for construction costs were stopped in September, and management fees were suspended in December.

“After extensive review, it has become clear the continuation of the agreement with Foggy Bottom Kitchen is not in the best interest of Oklahoma taxpayers. While the transition won’t be easy, our first duty is to safeguard taxpayer funds,” the department said in a statement.

Oklahoma State Parks staff members are now contacting people with reservations to make sure all of their catering needs will be met.

Department officials are now working with local small businesses to meet park guest demands until new restaurant operations can begin.

“Terminating the agreement is the department’s first step. We are continuing to cooperate with investigators and auditors to determine the extent to which unlawful behavior has been perpetuated against the state. The department is also exploring options to recover any taxpayer dollars paid to the operator for services or items for which the department was invoiced but ultimately not provided,” the statement read.

This past weekend, Swadley’s Bar-B-Q released a statement on Facebook, saying that, “Every aspect of the Foggy Bottom Kitchen project has been directed and approved by state officials. We stand by our team and all that we have done to benefit the people of our beautiful state.”